Divorcée Wins Bankruptcy Appeal

Rachel Small — Tue, 11 Dec 2007 16:00:00 -0500

In November, I wrote about a divorceés appeal to prevent her ex-husband's bankruptcy trustee from seizing her share of their marital home. Wendy Haines won her appeal to the British Appeals Court, which ruled that she wouldn't have to give up her share of the proceeds from the sale of the family home.

After their divorce, David Haines petitioned for bankruptcy. The trustee claimed that the transfer of the sale proceeds of the marital home defrauded David's creditors and was void. I'd written that I thought the High Court judge was wrong in awarding the trustee Wendy's share. If this decision was allowed to stand, it would place all property settlements in jeopardy where an ex-spouse files for bankruptcy.

Wendy does not have to help payoff her ex-husband's creditors by relinquishing part of her divorce settlement. The Court of Appeals reversal of the High Court's decision assures that divorce court settlement agreements could not be undone because one spouse becomes bankrupt. I rooted for Wendy, who now can enjoy a "clean-break divorce."

Vindictive spouses, by deliberately creating huge debts, can defeat a divorce property settlement agreement. In this case, with a 10-year-old child, Wendy needed a financial settlement after divorce which could not later be nullified by a bankruptcy trustee. Divorce actions need some closure and predictability.

The trustee is appealing to the House of Lords, the British court of last resort. I hope the Lords refuse to accept the case, or if they do, will affirm the Appeals Court holding.

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Divorcée Wins Bankruptcy Appeal